The government yesterday signed a Memorandum of Understanding (MoU) with a United Arab Emirates (UAE) firm for the construction of petroleum receiving and storage infrastructures.
The deal was signed by the Ministry of Energy and representatives of the UAE-based Emirates National Oil Company Group (ENOC).
The decision aims at making Tanzania a petroleum hub in East and Central Africa as well as sustaining the country’s fuel demands for up to six months.
Speaking during the event, the minister for Energy, Mr January Makamba, said the new infrastructure will reduce delay times for offloading of oil products, especially in transit to neighbouring countries.
“The current Petroleum Act requires the country to have enough petrol for utilization for 15 days, but currently the storage enables us to sustain for 30 consecutive days. Much should be done to increase the country’s storage capacity,” he said.
Minister Makamba who doubles as Bumbuli legislator said oil importation at the port of Dar es Salaam utilizes one pipeline, leading to failure to support the number of imports.
This leads to shipping delays of up to 18 days, which triggers an increase in the price of the product, according to the minister.
Furthermore, he said in times of world crisis like the ongoing Russia and Ukraine war or in case of disasters occurring on the ocean, a storage of up to six months would be required in the stock.
“Hopefully, the two sides will come up with an agreed investment contract worth between $400 million and $500 million in the next two to three months,” he said.
The ENOC Group chief executive officer, Mr Saif Humaid Al Falasi promised to cooperate with the government in resolving challenges facing the energy sector in the country.
“The current infrastructure will help us in the estimation and negotiation processes with the government. We have the experience to carry such projects to other countries like Morocco, Djibouti, Malaysia, and Dubai,” he said.
The Tanzania Association of Oil Marketing Companies (TAOMAC) executive director, Mr Raphael Mgaya, said the project will improve the efficiency of the oil business in the country as well as its transit to neighbouring countries.
“Estimation shows that we are losing up to 50 per cent of the business to ports located in neighbouring countries due to excessive delay. The project whose MoU has been signed today (yesterday) will provide a solution to the problem,” he said.